🛍 Backing Silvr

Overlooked #59

Hi, it’s Alexandre from Idinvest. Overlooked is a weekly newsletter about underrated trends in the European tech industry. Today, I’m excited to share with you that we’re partnering with Nima and Greg at Silvr to build the future of financing for e-commerce merchants and marketplaces.

We are delighted to partner with Nima and Grég in their journey to build Silvr which is reinventing financing for e-commerce players. We are participating in their €3m seed round together with ISAI, Serena and prominent business angels including Marc Ménasé (founder at Founders Future), Didier Valet (ex-COO at Société Générale), Matthieu Stefani (co-founder at ​CosaVostr​a) and Michaël Diguet (co-founder at ​Algoan​).

Silvr is a revenue-based-financing startup targeting the e-commerce vertical to help companies finance their marketing expenses without raising additional equity. How does it work?

• The merchant connects its shop (e.g. Shopify), its payment provider (e.g. Stripe) and its marketing tools (e.g. Facebook Ads and Google Ads) to Silvr.

• Based on the data collected, Silvr makes an assessment of the credit risk and the past marketing campaigns performance.

• If the assessment is positive, Silvr makes an offer to fund future marketing campaigns and wires the fund in less than 72h after the initial demand.

• To get its money back, Silvr gets a cut of the merchant’s revenues.

Our investment thesis is built around the following ideas:

• Nima and Greg are seasoned entrepreneurs who demonstrated a strong ability to execute since the launch of the company in March 2020. Nima (CEO) cofounfed as CEO an IT service company which reached 250 FTEs and more than €15m in sales while Grégory (CTO) was CTO at Chefclub and VP Engineering at PeopleDoc. In less than 12m, they have built a great first version of the product and have already onboarded 15 merchants to finance their marketing campaigns.

• Revenue-based financing is the future to fund predictable but non-asset backed expenses. As a business owner, you would love to get funding from a source that is non-dilutive (not equity) and that does not take months to obtain, like a credit line in banks. Revenue based financing is the perfect middle ground with a non-dilutive approach, a relatively cheap cost (6-9% interests), an ability to fund immaterial expenses (like acquisition budgets) and a quick process (72h to get the money on your bank account). Silvr is operating in the ecommerce vertical but could expand in the future into other verticals like gaming (Sugar), SaaS (Pipe) and consumer subscription mobile apps (Braavo).

• There is room to grow in Europe and there are multiple paths to build defensibility in this market. It's going to be a competitive market in the upcoming years. Canada-based company Clearbanc pioneered the model and is expanding to North America and Europe. Tech giants Paypal, Shopify and Stripe have all started to offer financing options to their customers in North America. Moreover, revenue based financing startups are popping all over Europe (Uncapped in the U.K., Wayflyer in Ireland, Uplift1 in Germany, etc.). Nonetheless, we believe that there is a market to be taken in France in the short term. When I called existing customers during our due diligence, French ecommerce merchants revealed that they did not know what revenue based financing before meeting Silvr and were ecstatic about the solution ("c'est le feu" as a customer told us). Once the French market is locked, there are many paths to build differentiation by expanding into other verticals than ecommerce, building an analytics product to support and lock customers, expanding into other geographies, building a neobank for ecommerce merchants etc.

Silvr will use the funding for recruitment, product development and commercial expansion.

• The startup plans to hire 10+ employees in the upcoming 12 months. Silvr is hiring a talent acquisition manager, a chief marketing officer and a product manager. You can find all the job offers on Welcome to the Jungle. If you are interested in one of these positions, you can ping me at ade@idinvest.com.

• Silvr will also use the funding to build a robust and seamless platform to source customers, score them and help them follow their financing.

• The startup wants to partner with 100+ customers in the next 18 months. At the moment, Silvr is focused on the ecommerce vertical targeting D2C brands and marketplaces.

At Idinvest / Eurazeo, we’ve been investing in the e-commerce sector for years. We know that e-commerce is a mega trend that has been reshaping the way we shop as consumers. We have invested and we will continue to invest to support all the stakeholders in the e-commerce ecosystem.

I love with this idea from Don Valentine (Sequoia’s founder) that venture funds should have “an aircraft carrier strategy” when they are bullish about a trend and that they want to contribute to its raise. Don applied this exact strategy to craft the PC market around Apple investing in both products computing infrastructure and applications. We are modestly doing the same in the European e-commerce space.

“The other lesson that they take from Apple is what Don and Sequoia call an aircraft carrier approach that they start taking to these big markets. Don realizes that Apple has created this PC market. It’s not just going to be Apple it's going to succeed in the PC market, they're going to usher in all of these other enabling companies that you need around the PC. Apple is the aircraft carrier but you need all the destroyers, the ships around it, all the planes, all the ships, and all that stuff. They started financing component companies around the PC industry. Apple and Don helped start a company called Tandon Corporation that makes disk drives. They are the first investors in Tandon. Tandon goes public after a couple years, reaches a market cap of over $1.5 billion. This is in the early 80s. A company called Printronix that makes printers, a company called Priam that makes disk drives, a company called Dyson that makes magnetic disks for the disk drives. All told I believe Sequoia ends up making about 15 investments in this aircraft carrier strategy around Apple and it drives much of their returns in these early funds.” - Acquired’s podcast episode on Sequoia

When most venture funds believed that it was impossible to compete with Amazon, our growth fund backed verticalized marketplaces like Farfetch, ManoMano, Vestiaire Collective and Backmarket. They have all become European leaders. In 2017, Eurazeo launched Eurazeo Brands which only invests in memorable brands through buy-out operations (e.g. Herschel, Montcler etc.). As a venture team, we believe that 2020 has completely reshuffled the cards in the commerce market and that we are about to see a new wave of innovation in the e-commerce space. In the past 12 months, our fund did several bets in the the infrastructure layer of the e-commerce market and Silvr is the first one that we are disclosing. Stay tuned for the others!

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Thanks to Julia for the feedback! 🦒 Thanks for reading! See you next week for another issue! 👋